Arduser v. Daniel Intern. Corp.

• Decision Date: 28 January 1982
• Docket Number: No. 53043,53043
• Citation: 7 Kan.App.2d 225,640 P.2d 329
• Parties: Dell Henry ARDUSER, Claimant-Appellant, v. DANIEL INTERNATIONAL CORPORATION, Respondent-Appellee, and United States Fidelity and Guaranty, Insurance Carrier-Appellee, and Kansas Workmen's Compensation Fund, Appellee.
• Court: Kansas Court of Appeals

Page 329

640 P.2d 329

7 Kan.App.2d 225

Dell Henry ARDUSER, Claimant-Appellant, v. DANIEL INTERNATIONAL CORPORATION, Respondent-Appellee, and United States Fidelity and Guaranty, Insurance Carrier-Appellee,

and

Kansas Workmen's Compensation Fund, Appellee.

No. 53043.

Court of Appeals of Kansas.

Jan. 28, 1982.

Syllabus by the Court

1. The fundamental rule of statutory construction, to which all others are subordinate, is that the purpose and intent of the legislature governs when that intent can be ascertained from the statutes. Legislative intent is to be determined by a general consideration of the entire act. Effect should be given, if possible, to the entire statute and every part thereof. To this end it is the duty of the court, so far as practicable, to reconcile the different provisions so as to make them consistent, harmonious and sensible. Where a statute is plain and unambiguous, this court must give effect to the intention of the legislature as expressed rather than determine what the law should or should not be. Where various provisions of an act conflict, this court should attempt to reconcile such provisions in order to make them harmonious and sensible.

2. The workmen's compensation fund does not stand as a prime, original or substitute obligor. Rather, its liability is purely derivative, in the sense that it is derived or deduced from the anterior obligation of the employer, upon the extent of which it depends and which it merely supplements. This liability does not attach unless and until the extent of the primary obligation which is sought to be supplemented, stands judicially established by an award against the employer.

3. The workmen's compensation fund's liability is derivative from that of the employer, and no action can be maintained directly against the fund by an employee. It follows that where, as here, a complete settlement has been reached between claimant and his employer, and where such settlement has been approved by the director and the district court, claimant is precluded from any further action against the fund.

Miles D. Mustain and Ronald C. Newman, of Mustain & Newman, Chartered, Kansas City, for claimant-appellant.

Michael J. Unrein, of Davis, Unrein, Hummer & McCallister, Topeka, for appellee Kansas Workmen's Compensation Fund.

Before FOTH, C.J., and SPENCER and MEYER, JJ.

MEYER, Judge:

In this workmen's compensation appeal, we consider a settlement agreement entered into by Dell Henry Arduser (claimant) with Daniel International Corporation (respondent- appellee, hereinafter referred to as the employer) and United States Fidelity and Guaranty (employer's insurance carrier, hereinafter referred to as insurance carrier). At issue herein is whether that settlement agreement (admittedly for a sum far less than that to which claimant would otherwise be entitled) precludes claimant from now pursuing or continuing an action against appellee Kansas Workmen's Compensation Fund (Fund). That is, does claimant have a direct action against the Fund, or is the Fund's liability solely derivative of that of the employer so as to bar action against the Fund after claimant has settled its claim with the employer and insurance carrier, and such settlement has been approved by the workmen's compensation examiner, by the administrative law judge, by the director, and the district court? The Fund was properly impleaded.

Four hearings were had herein: (1) formal settlement hearing before the examiner on January 27, 1977; (2) hearing before the administrative law judge on August 1, 1978, with its order dated September 29, 1980, regarding the Fund's liability; (3) review by the director on September 29, 1980, as shown by his order dated November 6, 1980; and (4) approval by the district court of the director's order.

The settlement agreement provided that claimant receive $13,071.10, which the parties to the agreement (viz. employer and claimant) agreed was in exchange for claimant's agreement not to seek further compensation from the employer or insurance carrier. Both parties agreed that the settlement would not affect their respective rights against the Fund.

At the first hearing the settlement agreement was approved by the examiner; however, the examiner indicated he did not know what effect this settlement would have regarding liability of the Fund. The Fund took the position that it had no obligation to either the claimant or the employer.

At the second hearing, the claimant and the employer sought recovery against the Fund. The administrative law judge made findings of fact and conclusions of law to the effect that claimant had a 50 percent work-related disability. He also made findings that make it clear the Fund would have been liable for the full amount of liability to claimant, had it not been for claimant's settlement with the employer and insurance carrier. Such findings are supported by the record. He also concluded that the Fund, because of claimant's settlement with the employer and insurance carrier, was not liable for any additional payment to the claimant. His order, in this regard, included the following:

"5. That a careful review of K.S.A. 44-566 et seq. discloses no intention on the part of the Kansas Legislature to permit a direct action for compensation against the Kansas Workmen's Compensation Fund by the claimant, but rather the intent as expressed is to promote and encourage employers to hire or retain in their employment persons possessed of certain physical or mental impairments as enumerated by K.S.A. 44-566(b). K.S.A. 44-567 speaks of relieving the employer of liability for compensation under either the 'but for' rule or by a contribution theory, and implies that liability against the employer must first be established. To establish employer liability for compensation to the claimant, certain elements must be proved, e.g. notice, claim, and employer-employee relationship; and to hold that the Fund should be liable for additional compensation to the claimant over and above that awarded the claimant and against the respondent and insurance carrier, would require a finding that the Fund was an employer. This we are not inclined to do. Furthermore, the settlement entered into and approved by the Special Examiner on January 27, 1977 between the claimant and the respondent-insurance carrier not only extinguished all further rights to compensation by the claimant against the employer, but also served to effectively limit all potential liability of the Kansas Workmen's Compensation Fund. Therefore, the claimant is not entitled to a further Award of additional permanent disability compensation not heretofore compensated, against the Kansas Workmen's Compensation Fund, and that such should be denied the claimant."

The Fund was required to reimburse the insurance carrier and employer for all amounts paid to the claimant.

On review, the workmen's compensation director, by order dated November 6, 1980, approved the administrative law judge's order in its entirety, and specifically ordered that there was no liability against the Fund in favor of the claimant since the claimant's rights against the Fund had been extinguished by the January 27, 1977, settlement between claimant, his employer and insurance carrier.

Thereafter, the District Court of Linn County, Kansas, sustained the director's order.

Claimant contends the 50 percent permanent disability finding made by the administrative law judge computes to $41,416.30. We find no contention in the record that such computation was incorrect. Since claimant had settled for $13,071.10, he contends he is now entitled to payment of the balance by the Fund, since the administrative law judge had found 100 percent liability of the Fund and that such 100 percent liability is based on uncontroverted evidence.

Claimant states the issue herein as follows: Whether an injured and permanently disabled workman is deprived of his right to be fully compensated by the workmen's compensation fund for his injuries and resulting permanent disability due to acceptance of a portion of the compensation due him through settlement with the respondent and its insurance carrier although specifically reserving his rights as to the Fund at the time of settlement.

The Fund states the issue as follows: Whether or not a claimant in a second injury type claim has a direct and independent action against the Fund even though the claimant has elected to extinguish all his rights under the workmen's compensation act against the employer by settling his claim with the employer and releasing the employer from any further obligations under the Kansas workmen's act via friendly hearing awarding the claimant a lump sum payment.

Regardless of how it is stated, the issue to be decided remains the same, that is: Can an action by a claimant be maintained or continued against the Fund after settlement between claimant and his employer? In other words, the question is whether the liability of the Fund is strictly and solely derivative from the liability of the employer.

Claimant's reason for settling with the employer was his alleged economic necessity at the time. He had reason, however, to know or to consider the possibility that his settlement might negate his rights against the Fund. The examiner's statements, as seen in the record, can be subject to the fair interpretation that the examiner did not know what the effect of his approving the settlement would have on the Fund's liability, even though his order reserved claimant's rights against the Fund.

The findings of the trial court with regard to the nature, extent and compensability of the injury are not made issues on appeal. Neither party disputes on appeal the finding of a 50 percent permanent disability, nor the finding that the Fund is liable for 100 percent of the disability benefits (but for the settlement) and that there should be no apportionment. Accordingly, the case presents...